Benchmarking Code of Conduct: Merits, Demerits, Challenges and Solutions - Essay Example

Benchmarking Code of Conduct (BCC): Merits, Demerits, Challenges and Solutions [Name Of Writer] [Course’s Title] [Instructor’s Name] [Issue Date] Introduction Benchmarking is a process that has gained recognition in every field of study and research. The paper begins with providing a comprehensive definition of benchmarking. Afterwards, it discusses the merits and the demerits of the benchmarking code of conduct. From there it argues about the current challenges being faced by the BCC and afterwards provides solutions as to how they can be rectified. At the end, conclusions and final comments are provided. What is Benchmarking? Benchmarking is a broad terminology that can be linked to a number of subjects in any business setting. Only after we fully understand the meaning and explanation of the Benchmarking Code of Conduct (BCC), will we be able talk in depth about the pros and cons of the subject matter. According to the American Productivity & Quality Centre (an International Benchmarking Clearing House) the Benchmarking Code of Conduct is, “The process of identifying and learning from the best practices anywhere in the world. It is a powerful tool in the quest for continuous improvement and breakthroughs.” A direct citation by the iSixSigma group on the idea of benchmarking has been provided below; “Benchmarking is the concept of discovering what is the best performance being achieved, whether in your company, by a competitor, or by an entirely different industry. Benchmarking is an improvement tool whereby a company measures its performance or process against other companies' best practices, determines how those companies achieved their performance levels, and uses the information to improve its own performance. Benchmarking is a continuous process whereby an enterprise measures and compares all its functions, systems and practices against strong competitors, identifying quality gaps in the organization, and striving to achieve competitive advantage locally and globally.” Martocchio (2001) in his book on Strategic Compensation provided a definition for benchmark jobs, as those posts of a similar nature present in another company/organization such that they provide a “reference point” against which various jobs/posts inside the company are measured. According to the BPR Online Learning Centre, “Benchmark refers to a measure of best practice performance. Benchmarking refers to the search for the best practices that yields the benchmark performance, with emphasis on how you can apply the process to achieve superior results.” According to an article in the American Supply association (March 2006) the following has been stated (a direct citation is provided), “Just as the absolute dollar amounts are inadequate in assessing a company's success, so too is a financial ratio inadequate unless there is a comparative against which to gauge performance. Such comparatives, or "benchmarks" as they are oftentimes called, can be in the form of a company’s historical performance over time, budgeted or planned performance and the comparatives of industry peers.” However, under this broad umbrella lie specific types of benchmarks, such as, functional benchmarking, internal benchmarking, process benchmarking, competitive benchmarking, industrial benchmarking, strategic benchmarking etc. According to What are the Merits of Benchmarking Code of Conduct? The bench marking process allows a company to fully understand the type of business that they are in. It also allows an organization to compare themselves against another company (usually in a similar industry) to see how well they are doing; in addition, it helps to fully analyze the processes of the other company. It enables a company to pick out the best points of the competition and to implement it in their own unique company style, thus benefiting from the positive points of the competitor while at the same time retaining its own positive aspects. No company can survive on its own and in complete isolation. For example, the Iranians had been the leaders as well as the pioneers in the hand-woven rugs industry. Iran’s second major export (after oil) is carpets. They make exquisite carpets that are world renowned, but because they have no ties with the global market, the weavers basically have no idea that the tastes of the international customers have changed over the years and that unless they cater to the specific needs (in the form of carpet colours and designs) and wants of the customers they will keep on loosing market share. While the carpet weavers have been making carpets in isolation, competitors (Pakistan, China, Bangladesh, India etc.) have come in and taken over the market that was once the premier of Iran. Simply, because the competitors know what the customers want and desire. The only way that the Iranian carpet industry can now get out of its muddle is by benchmarking itself against its competitors. The coaching/consultation services are expanding rapidly. More and more companies outsource consultants to help them out with any problems that they may have. A direct citation by (Gaskell, Carole 2006) is given as follows, “In theory, accredited coaches and coaching companies give HR and training and development decision-makers peace of mind that they are choosing a coach with credentials who has been "quality checked". But for coaching that is taking place in an organization, it is imperative that any accreditation or kite mark is directly relevant to the business and organizational context. Although coaching covers diverse applications and the core competencies are similar, the context is not.” What are the Demerits of the Benchmarking Code of Conduct? According to Krell (2003) most of the companies focus only on cost reduction when it comes to benchmarking. This creates havoc with the entire system of the company; as there are a number of other factors that also have to be looked into thoroughly in order to fully implement a system of benchmarking. That is, “a company should not focus on efficiency at the cost of other objectives and needs”. In addition, he has mentioned that in order to compete for a benchmarking reward (such as the Malcolm Baldridge National Quality Award) the entire company gears –up to work solely for the achievement of that particular award. Such a process may prove to be disruptive to the entire company, as the whole organization moves away from its primary goals and objectives and works towards another single goal that is at a deviation to the core business functions of the company. Lastly it has been mentioned by Krell that if a company decides to outsource its benchmarking processes, it should make sure that the team that is being hired is industry specific. An example in this case would be such that if a company in the retail industry hires a team that specializes in the banking industry to benchmark for it, it is obvious that the team has neither any prior experience in the retail market and nor is it likely to be equipped with the required data and facts & figures to deal with such a completely different industry from it’s area of specialization. Therefore, it is very important for a company to outsource to teams that specifically carter to their field(s) in the industry. Current Challenges Faced By the Benchmarking Code of Conduct A large number of companies now look only at their competitors that they fail to understand their own core competencies. Organizations now try to benchmark without first analyzing if their company actually needs that particular type of benchmark or not. For example, if a Public Relations firm decides to benchmark it’s industrial process just because their competitors are doing the same, it might not always work because that specific PR company’s core competency area might be strategy and that should be it’s point of benchmarking. In addition, Leahy (2000) points out that as product life cycles have decreased, businesses can no longer afford to spend precious time and resources on conducting long term, in-depth benchmarking. Whereas the benchmarking initiative in most companies used to be from six months to a year, that is no longer the case. An average benchmarking initiative now, has to start in three to four week’s time (this is at an even tighter schedule than the approximate average of three months from just a few years back). The Internet is a good source of ideas and data, but basing an entire benchmarking initiative on the information gathered solely from the Internet is a huge mistake. Another type of challenge being faced by companies today is that there with the acceptance of benchmarking methods in the corporate world a number of benchmarking models have been developed. This gets confusing for a person who is not an expert in the field of strategic benchmarking as to exactly which method to adopt and which process to benchmark one’s company against. Different companies in the same industry, today use sundry types of benchmarking models. Benchmarking is also a proven way in reducing IT infrastructure maintenance and operation (Thomas, 2006) Axon (2003) in his book has forecasted that in the near future some of the benchmarking challenges that will become imperative for the survival of any company are “global accounting and reporting standards will become a reality, a company will shift it’s focus from buying technology to using it and companies will no longer use the annual budget.” In this article (Kocourek and Newfrock, 2006) talk about the fact that most companies today are missing the message that the benchmarking initiative that has been applied at their companies are wrong for their particular organizations. A wrong benchmarking initiative will not only fail to make any improvements in the company but may also result in proving to be a big hassle for the organization in times to come. Solutions to the Challenges Faced by the BCC Solutions to some of the basic challenges being faced by any company undergoing or planning to undergo the process of bench marking is given as follows; It is imperative that a company first looks at what their competitors are doing and to fully analyze their objectives. Only by understanding the competition can an organization know what they are doing wrong and how to best rectify their mistakes. In addition, trainers and managers should work together to ensure that the employees understand the essence of bench marking and precisely what the company is trying to achieve (Dee and Hatton 2006). Therefore, benchmarking cannot be done on an upper with level, without there being any knowledge of it at the level of the rest of the employees of a company. It is a chance for a company to work together with its employees for the betterment of the organization. Therefore, every company should embrace it. According to Leahy (2000) the benchmarking efforts of a company do not need to be in isolation. One of the methods that big business companies are adopting is to work in collaboration of the very people that they are trying to get ahead of their competitors. One such company that Leahy has given an example of Cisco; which receives about eight hundred requests annually from competitor companies. The competitor learns to adopt new methods and processes faster than it would on an individual basis. This results in the availability of newer technology at a faster pace to the customers as well as the speedy of the new processes by the end-users. Cisco gains not only good will but huge amounts of profits as it acts as a consultant to these companies. In addition, it gains market share by bringing out newer technology at a faster pace. Thus, sharing the benchmarking is a speedy cost effective way for both the companies involved in the process. Conclusion In the end, benchmarking is a foolproof method of risk management in a competitive industry. However, the type of benchmarking methodologies and models that are employed by a company should be such that they fully suit a particular company. There are pros and cons to every method present. However, if the executives of a company are fully aware as to how to implement a certain benchmarking methods, are capable of fully utilizing the data that is present, they will be able to benefit their company in a much more profound manner. Bibliography Axson, D. (2003) "Best Practices in Planning and Management Reporting: From Data to Decisions" John Wiley & Sons, New York. Dee, K., Hatton, A. (2006) Face Training Evaluation Head-On People Management Vol. 12 Issue 6, p 40-41 Retrieved on 1st June 2006 from the World Wide Web: http://search.epnet.com/login.aspx?direct=true&AuthType=cookie,ip,uid&db=bsh&an=20344488&loginpage=Login.asp&site=ehost IsixSigma (2006) Retrieved on 29th May 2006 from the World Wide Web: http://www.isixsigma.com/dictionary/Benchmarking-1.htm Gaskell, Carole (2006) “Context Sensitive” People Management 2006, Vol. 12 Issue 7, p9-9, 2/3p Retrieved on 1st June 2006 from the World Wide Web: http://web8.epnet.com/citation.asp?tb=1&_ug=sid+E7EEB0C5%2DBA86%2D4CFD%2D8622%2D63E1232498E9%40sessionmgr6+dbs+bsh+cp+1+B135&_us=mh+1+hs+True+cst+0%3B1%3B2%3B3%3B4+or+Date+mdbs+bsh+ss+SO+sm+KS+sl+0+ri+KAAACB3A00059428+dstb+KS+sel+False+frn+1+5952&_uso=tg%5B0+%2D+db%5B0+%2Dbsh+hd+False+clv%5B0+%2DY+op%5B0+%2D+cli%5B0+%2DFT+st%5B0+%2Dbenchmarking++AND++DE++%22BENCHMARKING++%28Management%29%22+0792&cf=1&fn=1&rn=9 Leahy, T. (2000), “High Velocity Benchmarking”, Business Finance Magazine, Retrieved on 29th May 2006 from the World Wide Web: http://www.businessfinancemag.com Kocourek, P. Newfrock, J. (2006) Are Boards Worrying About The Wrong Risks, Vol. 27, Issue 157, p 6-11, 6p, Retrieved on 1st June 2006 from the World Wide Web: http://search.epnet.com/login.aspx?direct=true&AuthType=cookie,ip,uid&db=bsh&an=19887261&loginpage=Login.asp&site=ehost Krell, E. (2003), “Why Benchmarking Doesn’t Always Lead to Best Practices”, Business Finance Magazine, Retrieved on 29th May 2006 from the World Wide Web: http://www.businessfinancemag.com Thomas, H. (2006) Squeezing Dollars from Maintenance Computerworld Vol. 40 Issue 18, p 40-41, 2p Retrieved on 29th May 2006 from the World Wide Web: http://search.epnet.com/login.aspx?direct=true&AuthType=cookie,ip,uid&db=bsh&an=20712988&loginpage=Login.asp&site=ehost The Importance of Financial Ratio and Benchmark Analysis. American Supply Association (March 2006), Supply House Times, 49 (1):68 Business News Publishing Co. Retrieved on 1st June 2006 from the World Wide Web: http://rdsweb1.rdsinc.com/texis/rds/suite2/+rheDj9enxwwwwwFqz66shwxqnXxFqd1prdnDoLq15BdM/full.html Wyss, D. (2006) The Mixed Message on Jobs Business Week Online p4-4, 1p, Retrieved on 1st June 2006 from the World Wide Web: http://search.epnet.com/login.aspx?direct=true&AuthType=cookie,ip,uid&db=bsh&an=19889350&loginpage=Login.asp&site=ehost Read More